AGRI Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, May 30, 2002

¹

1530

The Chair (Mr. Charles Hubbard (Miramichi, Lib.))

Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food)

¹

1535

The Chair

Mr. Bruce Deacon

Mr. Howard Hilstrom

Ms. Yaprak Baltacioglu (Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food)

Mr. Howard Hilstrom

Dr. André Gravel (Executive Vice-President, Canadian Food Inspection Agency)

Mr. Howard Hilstrom

Dr. André Gravel

¹

1540

Mr. Howard Hilstrom

Dr. André Gravel

Mr. Howard Hilstrom

Dr. André Gravel

Mr. Howard Hilstrom

Dr. André Gravel

Mr. Howard Hilstrom

Dr. André Gravel

Mr. Howard Hilstrom

¹

1545

The Chair

Mr. Howard Hilstrom

The Chair

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ)

Dr. André Gravel

Mr. Odina Desrochers

Dr. André Gravel

¹

1550

Mr. Odina Desrochers

Dr. André Gravel

Mr. Odina Desrochers

Dr. André Gravel

Mr. Odina Desrochers

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

Ms. Yaprak Baltacioglu

Mr. Claude Duplain

Mr. Douglas Hedley (Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food)

¹

1555

Mr. Claude Duplain

Dr. Gordon Dorrell (Acting Assistant Deputy Minister, Research Branch, Department of Agriculture and Agri-Food)

Ms. Yaprak Baltacioglu

Mr. Claude Duplain

Ms. Yaprak Baltacioglu

Dr. André Gravel

The Chair

Mr. Dick Proctor (Palliser, NDP)

º

1600

Ms. Yaprak Baltacioglu

Mr. Dick Proctor

Ms. Yaprak Baltacioglu

Mr. Dick Proctor

Mr. Bob Wettlaufer (Acting Director General, Prairie Farm Rehabilitation Administration, Department of Agriculture and Agri-Food)

Mr. Dick Proctor

Mr. Bob Wettlaufer

Mr. Dick Proctor

Mr. Bob Wettlaufer

Mr. Dick Proctor

Mr. Bob Wettlaufer

Mr. Dick Proctor

Mr. Bob Wettlaufer

Mr. Dick Proctor

Mr. Bruce Deacon

º

1605

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

Mr. Bruce Deacon

The Chair

Mr. Bruce Deacon

The Chair

Mr. Mark Eyking (Sydney—Victoria, Lib.)

Mr. Mark Corey (Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food)

Mr. Mark Eyking

Mr. Tom Richardson (Director General, Farm Income and Adaptation Policy, Strategic Policy Branch, Department of Agriculture and Agri-Food)

º

1610

Mr. Mark Eyking

Mr. Tom Richardson

The Chair

Mr. Rick Borotsik (Brandon—Souris, PC)

Mr. Bruce Deacon

Mr. Rick Borotsik

Mr. Bruce Deacon

Mr. Rick Borotsik

Mr. Bruce Deacon

Mr. Rick Borotsik

Mr. Bob Wettlaufer

Mr. Rick Borotsik

Mr. Bob Wettlaufer

º

1615

Mr. Rick Borotsik

Mr. Bob Wettlaufer

Mr. Rick Borotsik

Mr. Bob Wettlaufer

Mr. Rick Borotsik

Mr. Bob Wettlaufer

Mr. Rick Borotsik

Mr. Bob Wettlaufer

Mr. Rick Borotsik

Ms. Suzanne Vinet (Chief Agriculture Negotiator, International Trade Policy Directorate, Market and Industry Services Branch, Department of Agriculture and Agri-Food)

Mr. Rick Borotsik

Ms. Suzanne Vinet

Mr. Rick Borotsik

Ms. Suzanne Vinet

Mr. Rick Borotsik

Ms. Suzanne Vinet

Mr. Rick Borotsik

The Chair

Mr. Paul Harold Macklin (Northumberland, Lib.)

Dr. André Gravel

Mr. Paul Harold Macklin

º

1620

Dr. André Gravel

Ms. Yaprak Baltacioglu

Mr. Paul Harold Macklin

Dr. André Gravel

Mr. Paul Harold Macklin

Dr. André Gravel

The Chair

º

1625

Mr. Douglas Hedley

Mr. David Anderson

Ms. Yaprak Baltacioglu

Mr. David Anderson

º

1630

Ms. Yaprak Baltacioglu

Mr. Howard Migie (Director General, Marketing Policy, Strategic Policy Branch, Department of Agriculture and Agri-Food)

Mr. David Anderson

Mr. Howard Migie

The Chair

Mr. Dick Proctor

Dr. André Gravel

Mr. John Jones (Comptroller, Canadian Food Inspection Agency)

º

1635

Mr. Dick Proctor

Mr. John Jones

Mr. Dick Proctor

Mr. John Jones

Mr. Dick Proctor

Mr. John Jones

Mr. Dick Proctor

Mr. Bob Wettlaufer

Mr. Dick Proctor

Mr. Bob Wettlaufer

Mr. Dick Proctor

The Chair

Mr. Bob Wettlaufer

Mr. Tom Richardson

The Chair

Mr. Bob Wettlaufer

The Chair

Mr. Bruce Deacon

º

1640

The Chair

Mr. Bruce Deacon

The Chair

Mr. Douglas Hedley

The Chair

Mr. Bruce Deacon

The Chair

Mr. Mark Eyking

The Chair

Mr. Howard Hilstrom

Dr. André Gravel

º

1645

Mr. Howard Hilstrom

Mr. Bob Wettlaufer

Mr. Howard Hilstrom

Mr. Howard Migie

Mr. Howard Hilstrom

Mr. Gord Pugh (Director General, National Affairs, Canadian Grain Commission)

Mr. Howard Hilstrom

Mr. Gord Pugh

º

1650

Mr. Howard Hilstrom

The Chair

Mr. Dick Proctor

Dr. André Gravel

Mr. Dick Proctor

Ms. Yaprak Baltacioglu

Mr. Bob Carberry (Vice-President of Programs, Canadian Food Inspection Agency)

Mr. Dick Proctor

Mr. Bob Carberry

Mr. Dick Proctor

º

1655

Mr. Gord Pugh

Mr. Dick Proctor

Ms. Yaprak Baltacioglu

Mr. Dick Proctor

The Chair

Mr. Paul Harold Macklin

Dr. Gordon Dorrell

Mr. Paul Harold Macklin

Dr. Gordon Dorrell

Mr. Paul Harold Macklin

Dr. Gordon Dorrell

»

1700

Mr. Paul Harold Macklin

Dr. Gordon Dorrell

The Chair

Dr. Gordon Dorrell

The Chair

»

1705

Dr. Gordon Dorrell

The Chair

Mr. Howard Hilstrom

Dr. André Gravel

Mr. Howard Hilstrom

Dr. André Gravel

Mr. Howard Hilstrom

Ms. Suzanne Vinet

Dr. Gordon Dorrell

Mr. Howard Hilstrom

»

1710

Ms. Suzanne Vinet

»

1715

Mr. Hilstrom

Ms. Suzanne Vinet

Mr. Howard Hilstrom

Dr. André Gravel

The Chair

Mr. Claude Duplain

Dr. Gordon Dorrell

Mr. Claude Duplain

Dr. Gordon Dorrell

Mr. Claude Duplain

»

1720

Dr. Gordon Dorrell

The Chair

Mr. Mark Eyking

Ms. Yaprak Baltacioglu

Mr. Michael Keenan (Director General, Research and Analysis Directorate, Strategic Policy Branch, Department of Agriculture and Agri-Food)

Mr. Mark Eyking

The Chair

Mr. Paul Harold Macklin

Ms. Yaprak Baltacioglu

»

1725

Mr. Paul Harold Macklin

Ms. Yaprak Baltacioglu

Mr. Paul Harold Macklin

The Chair

Mr. Hilstrom

Mr. Bob Carberry

Mr. Howard Hilstrom

Mr. Bob Carberry

Mr. Howard Hilstrom

Dr. André Gravel

Mr. Howard Hilstrom

The Chair

Mr. Tom Richardson

»

1730

Ms. Yaprak Baltacioglu

The Chair

---

CANADA

Standing Committee on Agriculture and Agri-Food

---

NUMBER 071

l

1st SESSION

l

37th PARLIAMENT

---

EVIDENCE

Thursday, May 30, 2002

[Recorded by Electronic Apparatus]

¹  (1530)  

[English]

    The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): It being 3:30, and all being well, we'll begin our order of the day today. Pursuant again to Standing Order 81(4), we're looking at the main estimates for 2002-2003, particularly at votes 1, 5, 10, 15, 20, 25, 30, 35, and 40 under the Department of Agriculture and Agri-Food.

    We would like to welcome the officials to our meeting this afternoon. This will be, hopefully, our last meeting dealing with the estimates before the end of May, at which time we should have them completed. We had a good meeting this morning with the minister, and we'll follow up now with the officials. We're glad to see that our chairs are nearly filled again. The member from Manitoba was looking for a big audience. Maybe he's out there looking for more people, but when he gets here, he may have some questions.

    Mr. Deacon, I guess you're to lead off with a short presentation. Welcome. Perhaps you could introduce your officials as well.

    Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food): Thank you, Mr. Chair. Members of the committee, it is very much our pleasure to appear before you this afternoon to address the 2002-2003 main estimates, including the report on plans and priorities for the Department of Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency.

    I will introduce the officials who are appearing before you today: André Gravel, executive vice-president of the Canadian Food Inspection Agency; Suzanne Vinet, who is our chief agricultural negotiator in the department; Mark Corey, ADM, market industry services branch; Tom Richardson, director general, farm income and adaptation policy; Yaprak Baltacioglu, ADM, strategic policy branch; Douglas Hedley, ADM, farm financial programs branch; Gordon Dorrell, ADM, research branch; Bob Wettlaufer, director general, PFRA.

    Earlier today the minister spoke about the new agricultural policy framework, which formed the policy context in which the plans and priorities were developed for 2002-2003. Accordingly, this year's report on plans and priorities includes an indication of the emerging priorities and directions we expect the department will take over the next three years. It also relates these emerging priorities to the three business lines approved last year. The new direction the department is pursuing will advance the strategic outcomes we have identified in the areas of security of the food system, health of the environment, and innovation for growth.

    The December 2001 budget committed the Government of Canada to providing its share of the predictable and long-term funding to support the new policy approach. The main estimate documents we are discussing today do not reflect this commitment, as the main estimates cannot reflect spending plans that have not been duly considered and approved by cabinet and by Parliament. As a result, the budgets for the department appear to be declining for this year and the next two years. The apparent decline is accentuated by the ending of the one-time special assistance of over $500 million last year and by the sunsetting of assistance programs, including the dairy subsidies, AIDA program, and programs under the agricultural risk management framework, including CFIP.

    Therefore, what is reflected in the estimates and the report on plans and priorities you have before you is only part of the budget expected to be available to fund the initiatives to be carried out this year and over the next two years. The estimates and report on plans and priorities reflect, in effect, the transition from the programs previously administered and do not reflect any new programming under the minister's new agricultural policy framework.

    With that introduction, Mr. Chair, we would be pleased to answer any questions committee members may have on the estimates and report on plans and priorities. Thank you.

¹  (1535)  

    The Chair: Thank you, Mr. Deacon.

    As you know, members are allocated so much time each, and your answer is part of their time, so I hope the questions will be to the point and the answers quite succinct.

    Howard leads off for eight minutes.

    Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Thank you, Mr. Chairman.

    The problem we have here is that farmers borrow money based on projected income and that. How come the department can't and the government doesn't have more built into the main estimates, as opposed to always having this large sum in the supplementary estimates? The minister indicated that it would be certainly in excess of $500 million and maybe even in excess of $670 million. Why couldn't that have been in the main estimates? Can you explain that?

    Mr. Bruce Deacon: It's really a question of timing. The main estimates are put together with data as of December. That's when the books are closed. Subsequent things that are approved by cabinet are then included in supplementary estimates that follow in the next fiscal year.

    Mr. Howard Hilstrom: Okay, but in December the department knew, because they're your own statistics, that the economic hurt due to foreign subsidies was $1.3 billion a year. You folks knew that in the department. Why wasn't it put forward that the funding, the main estimates, had to be at least a portion of or the whole $1.3 billion? It was known, so why wasn't it in there? Why is it left to be supplementary? It wasn't that you didn't know the facts.

    Ms. Yaprak Baltacioglu (Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food): The decision for the additional income money that will be included in the supplementary estimates was made in the February-March period. That is why there's a time lag.

    Mr. Howard Hilstrom: So we might as well leave promises of money alone. We'll just wait for the ministers to ultimately come out with it and try to keep the pressure on him to get it out as quickly as possible.

    I've got some problems here with the cattle industry and this TB business. How come the CFIA failed to tell anybody in the cattle industry, including the provincial Minister of Agriculture in Manitoba, that we lost our TB-free status five years ago?

    Dr. André Gravel (Executive Vice-President, Canadian Food Inspection Agency): In fact, Canada did not loose its TB-free status as a result of the outbreak of tuberculosis in Manitoba. You have to consider that Canada is still meeting the requirements for being a tuberculosis-free country. There hasn't been any restriction on movement of cattle between provinces and from any province of Canada to any country in the world. What's happened in Manitoba is an isolated incident, and in the context of our discussion with the cattle industry and the livestock industry and the provinces at the Canadian Animal Health Consultative Committee in its yearly annual meeting, there's an update being made on the status of the different diseases.

    Mr. Howard Hilstrom: What's Manitoba's status right now, today?

    Dr. André Gravel: Manitoba is TB-accredited.

¹  (1540)  

    Mr. Howard Hilstrom: And that is not fully TB-free. That's what I asked you, and this is the problem we're having. I asked the minister in the House the other day, and I got an answer that didn't answer the question straight up. And I got an answer from you, Mr. Gravel, that wasn't straight up. What I'm looking for is straight-up answers.

    Dr. André Gravel: If you'll let me speak, you're going to get an answer.

    Mr. Howard Hilstrom: You said that Canada was TB-free, when you know I was specifically talking about Manitoba, so let me ask my next question.

    The minister and this whole Agriculture department is trying to help farmers' income. Tuberculosis is on the verge of destroying a significant portion of cattlemen's income. In Ontario we have a case where there's a dairy herd, and my understanding is that there are 62 animals in there and 59 tested positive for tuberculosis, one calf was confirmed dead of what they thought was pneumonia. Is that true?

    Dr. André Gravel: There is a case in Ontario in a dairy herd, and TB has been confirmed. A trace-out of animals that originate from that herd has been done as well, and these herds are at the present time being tested. That herd will be taken out.

    Mr. Howard Hilstrom: I've got the list of all the ministers who received a letter from the Canadian bison industry on May 30--I appreciate that's just happening here today. You guys in the CFIA have known about a TB problem in the Riding Mountain National Park elk herd for a long time, yet currently--and you can disagree with me if you want--it's spreading out, as it has now for years, recontaminating cattle herds. We've got Wood Buffalo National Park on the verge of causing massive problems for the bison industry, because bison there have TB. What are you guys doing? I've asked both ministers, and they're talking about scientists. I want to know, when is the CFIA going to start culling the herd of elk in Riding Mountain National Park and getting rid of diseased animals in the national park up in Wood Buffalo? Where's the plan?

    Dr. André Gravel: Whenever there is a case of tuberculosis in the Manitoba area, especially if it's in proximity to the Riding Mountain National Park, the CFIA conducts testing of herds in a 10-kilometre zone area. If TB is discovered during that routine testing, action is being taken. You have to understand that CFIA is not the sole stakeholder and owner of that herd in the park. There is a task force looking at what measures can be taken to limit the risk associated with TB in that herd in Riding Mountain National Park.

    Mr. Howard Hilstrom: This whole agriculture department, from the minister right down to the lowest bureaucrat, studies, works at things, consults, spends money, but you don't do anything. That elk herd in Riding Mountain National Park is the reservoir of tuberculosis. It spreads out from there.

    I have got a report right here about bovine TB in the United Kingdom. Over there it was caused by badgers, and in this report it clearly shows that the environmentalists, people like the heritage minister of this country, are saying, no, you can't cull any wild animal, let nature take its course. If you folks from the CFIA are accepting that and not fighting against that, we are going to be in the same position as the U.K. They have got cases now. It says in this report an average of three herds are succumbing daily. If this report is wrong, that's fine, but I can't believe you are not going to do anything about these wild animals with TB other than study it.

    Dr. André Gravel: I didn't mention studying, these are your words. What I said is that the agency is taking action whenever a case is discovered. There is no comparison between the status of the U.K. and the status of Canada. The U.K. is experiencing problems because they had to neglect their TB program to deal with foot and mouth disease. This is not the case in Canada. I am convinced that the eradication of TB in the Riding Mountain National Park has to be a joint effort between provincial and federal agencies.

    Mr. Howard Hilstrom: I'll tell you where the joint effort is coming, it's coming from the ranchers in that area and the farmers in that area who are going to team up with the first nations people of that area. I will guarantee you that they are going to take on the culling of that herd. If you don't think that is not on the go right now, I'm telling you it is, and that herd will be culled whether this department wants to do it or not.

¹  (1545)  

    The Chair: Howard, I'm sorry, but as the chair, I have to say you are taking the law into your own hands. I would be afraid that with people watching, you might get yourself in some difficulties.

    Mr. Howard Hilstrom: On that same point, the chair would recognize that the first nations people have the right to take an elk at any time they want, and your comment to me that I am advocating something illegal is not true. I am advocating the rights of the first nations people to take an elk, and if there are too many elk--and there are 5,000 in Riding Mountain National Park--if the government won't do anything about it, if they come out of that park, I'm encouraging the first nations to use their hunting rights and cull that herd down, in cooperation with the local ranchers, who can help point them out and assist the aboriginal people in that hunt.

    You had my advice. Take your own, whatever it leads to.

    The Chair: Thanks.

    Odina.

[Translation]

    Mr. Odina Desrochers (Lotbinière—L'Érable, BQ) Thank you very much, Mr. Chairman.

    My questions are for you, Mr. Gravel.

    First, this is our third meeting. We have had a very heavy schedule over the past few days. I would like to tell you, Mr. Gravel, that throughout Canada and Quebec, people are concerned about the budget, the staff and the authority of the Canadian Food Inspection Agency, especially considering the increasing food safety standards. There is the whole issue of GMOs. Recently, people have also become concerned about the Americans using the US Farm Bill to impose even more restrictions on Canadian products going onto the American market.

    Do you feel that you currently have a large enough budget and enough people to meet current expectations, and also future requirements regarding our products, on the part of the Americans as well as the European community?

    Dr. André Gravel: Thank you for the question. It would give me great pleasure to attempt an answer.

    You have asked me if the agency has sufficient funds. I think that any government or private organization would reply that its wish would be to have more resources in order to carry out its mandate.

    The agency has been given additional funds over the past two years. For example, in the area of biotechnology, the agency has been given a supplementary budget of $10 million per year, which has helped us develop our ability to undertake GMO testing. It has also helped us develop our ability to assess private sector bids.

    The agency has also received funds under the antiterrorist envelope, given the events of September 11. It received $36.2 million, which were allocated for border control, monitoring and screening, and laboratory capacity.

    The agency also received funding over the past year for the purposes of detecting residues in meat.

    Therefore, I believe we are in a better financial position now than we were when I came here last year. Of course, we cannot cover all our priorities, but we are in a better position than we were a little while ago.

    Mr. Odina Desrochers: Do you have enough people to carry out the mandate you have been given and to meet current and future expectations?

    Dr. André Gravel: When the agency was established in April, 1997, it had 4,200 or 4,300 people. At the last count, there were approximately 5,000. Thus, there has been an increase not only in our budget and laboratory infrastructure, but also in our frontline staff that the agency uses to carry out its mandate.

¹  (1550)  

    Mr. Odina Desrochers: Organic agriculture is becoming more and more popular in Canada. Are you able to keep up with these people? We know that certification and recognition of organic food requires more work on the part of your agency.

    Dr. André Gravel: In terms of organic agriculture, the agency has provided technical assistance to the certification organizations to provide them with a regulatory framework. The agency is not directly involved in certifying organic food. However, as with all of the products, organic produce must be labelled according to Canadian labelling legislation and regulations. If complaints are made, the agency must ensure follow up and ensure that products are labelled appropriately. It is not part of our mandate to monitor organic produce.

    Mr. Odina Desrochers: Mr. Gravel, as we are talking about labelling, I would like to tell you that GMOs are an issue through the country. More and more people are asking that products containing GMOs be labelled. More and more consumers want to know what they are eating. Within the international market, there will certainly be countries who will want to know whether products contain GMOs or not.

    Have you moved forward in that area? Can we expect that kind of food will be labelled and identified on the market soon?

    Dr. André Gravel: Currently, the agency, like the Canadian government, encourages the use of voluntary standards. Furthermore, a task force is in the process of developing voluntary GMO labelling standards.

    In terms of products that may be dangerous to human health, obviously the agency will ensure that products containing allergens or that do not meet ingredient standards, will be labelled.

    In terms of other types of products, the agency does not really have an official position. Because we are a regulatory agency, what we are interested in is having regulations that can be applied. To be able to apply MGO regulations, we need technical tools. At this point in time, it is somewhat difficult to ensure that a pizza labelled as being GMO free, does not contain GMOs. This is a product that contains many ingredients and it is very difficult for a regulatory agency to ensure that everyone of those ingredients does not contain GMOs.

    Genetically modified products that are on the market have been studied by the agency in terms of their impact on the environment and by the Minister of Health in terms of human health. We feel that in both cases, there is no risk.

    Mr. Odina Desrochers: Thank you, Mr. Chairman.

    The Chair: Have you finished?

    Claude.

    Mr. Claude Duplain (Portneuf, Lib.): Good afternoon.

    I would like to ask a question about natural disasters, that seem to be happening more frequently and disturbing agriculture for a much longer period of time. We do not have an adequate safety-net program to assist producers in managing this type of risk. Is it not time that the department consider this issue and develop a safety-net program for disasters, given that disasters are becoming more and more common?

[English]

    Ms. Yaprak Baltacioglu: I'll start, and my colleague Doug Hedley can continue.

    As our minister said, we're looking at a number of initiatives not only to put the sector on the right footing for the future, but also to deal with the short-term issues. Natural disasters, you are right, do occur in agriculture, and they are part of the biggest risk. We do have some programs in place that deal with natural disasters. However, some of our programs fall short in dealing with those natural disasters in an appropriate manner. For example, if the fruit trees are damaged, what happens with the tree loss? We are looking at some alternatives for disaster programming.

[Translation]

    Mr. Claude Duplain: So nothing has been developed. Could you give us an idea of where we're going, the kind of program you expect? Is the department studying this?

[English]

    Mr. Douglas Hedley (Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food): One of the areas we are developing is a business interruption insurance program, at the request of the poultry industry. We have been working with them over the last two years to develop an insurance product, so that when a major disease or some other catastrophe strikes a flock or a herd in Canada, they will be covered for any remaining asset losses and income while they are getting back on their feet. That program we are developing jointly with the private sector, and it should be in place for the coming year. We see it as a model for continuing to develop that kind of product for all of agriculture.

    The one large program we have for disasters is operated under the Department of National Defence. It is the DFAA, the disaster financial assistance arrangement, that is joint with the provinces, where, as a disaster occurs, depending on the size of it, it is first at the municipal level, then the municipal and provincial, and finally the federal level. The ice storm, the Red River flood, the Saguenay flood, the events in Edmonton would be examples of that.

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[Translation]

    Mr. Claude Duplain: In terms of innovations for growth, I read the following:

The forecast gross spending for 2002-2003 would be $389.5 million—that is, 21% of total gross spending. The purpose of this sector is:

—is to develop and adopt new products and procedures that will improve the agrifood and agriculture industries competitive advantage and

—to increase the diversification of markets for Canadian products and services by investing in the creation of an environment that encourages discovery and innovation, and looks for diversification opportunities.

    I would like to know if you are developing a strategy that will help producers increase the added value of their products, which would make them more competitive and would increase their chances of improving their income. Why is it that agriculture producers always seem to be at a disadvantage in the agrifood chain?

[English]

    Dr. Gordon Dorrell (Acting Assistant Deputy Minister, Research Branch, Department of Agriculture and Agri-Food): A good portion of the research budget in the department is looking at diversification, whether that's improved quality, new uses for products, or new uses for ingredients in products, anything to expand the value of the product in the whole chain.

    Ms. Yaprak Baltacioglu: I would add that we have the CARD program, under which we do invest a lot in value-added. I know some of you were at the CARD showcase, I believe last month, where the industry showcased all the innovative products they're developing as well.

[Translation]

    Mr. Claude Duplain: We met people from veterinary colleges, where there seems to be a major problem. I would like to know if the department thinks that over the coming year it will invest money at the federal level to counter a possible shortage in veterinarians. I'm talking about veterinary colleges.

[English]

    Ms. Yaprak Baltacioglu: I'll start, and André can continue.

    The department is very much aware, as well as the agency, of the situation in the four veterinary colleges of Canada. We feel that accreditation by the Canadian veterinarians is critical for export capacity, especially in the livestock sector. As our minister mentioned this morning, we are looking into that and he is having discussions with his cabinet colleagues on what the federal government can do in this area. He also, however, mentioned that this is provincial jurisdiction, as being post-secondary education. Therefore, there will have to be a role for the provincial governments as well.

[Translation]

    Dr. André Gravel: I would like to point out that from the agency's point of view, accrediting Canadian veterinary colleges is very important. The Canadian Food Inspection Agency is one of the largest employers of veterinarians in Canada. The agency employs 600 to 700 veterinarians. One of our conditions of employment is that these veterinarians come from schools certified by the American association.

    The minister was clear this morning. It is definitely a priority for his department. It is also a priority for the agency.

[English]

    The Chair: Merci, Claude.

    Dick.

    Mr. Dick Proctor (Palliser, NDP): Thanks, Mr. Chair.

    This afternoon, when the minister was here, he said on at least three occasions, we're not done yet with assistance to farmers, and on one of those occasions he indicated that the federal government would be going ahead on its own in some projects. I wonder whether anybody here could tell us what kinds of projects those might be where the government would proceed on its own, without provincial or territorial assistance.

º  (1600)  

    Ms. Yaprak Baltacioglu: You are right, sir, our minister has indicated that we're working on a two-pronged approach. The approach involves making not only long-term investments, but investments in the short term as well. And our minister indicated that while agriculture is a joint federal-provincial jurisdiction, there will be some actions that will be federal only. For example, some of the science in support of regulatory actions or behind standard setting is a federal responsibility. So those types of activities will be under federal jurisdiction. I cannot give you the specific details of every project, but I think that gives you a sense of how we're trying to divide up the world into what are appropriate roles for federal funding alone and what would be for federal-provincial.

    Mr. Dick Proctor: Is there any scenario in which you would envisage that on a trade injury compensation program the federal government would go it alone?

    Ms. Yaprak Baltacioglu: I think our minister has been very clear on a number of occasions, this morning, as well as in the House and during various press conferences, that he feels that agriculture is joint jurisdiction. The provinces benefit from positive aspects of trade, so they should be sharing the consequences. Our minister made it clear that this was the position of the federal government

    Mr. Dick Proctor: Thank you. I certainly won't get into a debate with you about that, but I would just say for the record that I know very few people in this country who think this should be a joint federal-provincial responsibility.

    Mr. Wettlaufer from PFRA, you were here a month ago, and I think we had an exchange at that time. The situation obviously hasn't improved in western Canada. Perhaps it has in some parts of Alberta, but certainly not much in Saskatchewan. Can you just bring us up to date on what the situation is now with regard to PFRA and the rural water development program?

    Mr. Bob Wettlaufer (Acting Director General, Prairie Farm Rehabilitation Administration, Department of Agriculture and Agri-Food): There has been a little bit of rain throughout Alberta and Saskatchewan, not a whole lot, though, so the demands on our rural water development program continue, and they are quite high. We have about 2,600 applications right now for our program, and we certainly aren't able to service all of those. What we are trying to do is prioritize the applications and assist those people who have water supply projects that will benefit a larger number of people and will be more drought-proof, and that will get them through this drought period.

    Mr. Dick Proctor: Are those 2,600 applications across the prairies or just in the province of Saskatchewan?

    Mr. Bob Wettlaufer: That's in Saskatchewan.

    Mr. Dick Proctor: Do you know the number of applications in Alberta and in Manitoba?

    Mr. Bob Wettlaufer: The situation in Alberta is a little different, because the Province of Alberta has a program for a water supply project. So most of our work in Alberta is dealing with studies, things like groundwater investigations. I don't know the numbers in Manitoba to date. They certainly won't be as high as in Saskatchewan, but they will be significant.

    Mr. Dick Proctor: Of the 2,600 in Saskatchewan a little over 500 have been approved, and the money at the moment has evaporated, it's all gone.

    Mr. Bob Wettlaufer: Basically, the available funds have been allocated to the best projects.

    Mr. Dick Proctor: Right, but there is no more money available at this point.

    Mr. Bob Wettlaufer: Correct. It has been allocated.

    Mr. Dick Proctor: We were talking earlier, and we couldn't find in the estimates where the money.... I think the minister, when he was here, talked about $120 million for PFRA. Where do we find that exactly in the estimates book? Can anybody give that information to us?

    Mr. Bruce Deacon: You won't find PFRA identified at the level of the estimates. The budget for PFRA would appear in two places, part of the grants and contributions portion, because their budget is partly grants and contributions, and under the section dealing with health of the environment, which actually takes what PFRA does in that area, plus other activities of the department.

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    Mr. Dick Proctor: What is the actual amount for this year for PFRA? I didn't quite catch it when the minister said. Do you have it?

    Mr. Bruce Deacon: The minister said this morning it's approximately $126 million in total, and approximately $60 million of that is dealing with operating funds, the remainder being grants and contributions of various sorts. Those items you will find appearing under transfer payments, grants, and contributions, and they tend to be detailed within part II of the main estimates.

    Mr. Dick Proctor: I have one final question, perhaps to Mr. Deacon. Can you tell us where in the report on plans and priorities we can find the amounts allocated to the farm income safety net, and is there a breakdown for each program in that safety net?

    Mr. Bruce Deacon: You will find most of the safety nets included under security of the food system. There is a detailed breakdown of all grants and contributions programs, summarized in this part of the report on plans and priorities. In part II of the main estimates you will find detail of all programs listed, under which you can identify the safety nets. There are actually copies of that available here, if anyone wishes for one.

    The Chair: Bruce, just to clarify that, the money allocated for this coming fiscal year, this fiscal year we are into, for PFRA is how much?

    Mr. Bruce Deacon: Approximately $126 million.

    The Chair: Okay.

    Mark.

    Mr. Mark Eyking (Sydney—Victoria, Lib.): We've been travelling across this country on a task force, and there was quite a bit of concern about the concentration of processors and retailers. Is your department doing any projections on where we are going in the next few years in the marketplace, and maybe where farmers should be going? Are you helping them adjust for those changes? That is my first question.

    My second question is about the safety net programs. We hear a lot of complaints that a lot of these programs use the averaging of years, and many farmers have quite a few consecutive bad years, so they can't seem to draw on these programs. Also, the minister was saying this morning there are hundreds of millions of dollars in these NISA programs that farmers aren't triggering. So what is the problem, and are you people being creative on new programs out there that could be better suited for farmers, especially people in the cropping sector, where they have consecutive bad years?

    Mr. Mark Corey (Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food): Perhaps I could deal with the first question on the retail food sector concentration. It's an important issue in the industry. We hear this from the Canadian Federation of Independent Grocers right down to the producers themselves, the small food processors. There are two parts to the answer. The first one is where we are at internationally, and the second is what we are doing about it.

    Internationally, Canada is actually about in the middle of the pack when it comes to concentration. The five largest food retailers in Canada, for example, account for about 60% of national grocery sales. It is much higher than that in some European countries, and in some it's up to 95%. It's lower in the U.S. The important thing is that the trend is towards more concentration. It's about 1% a year.

    As to what we are doing about it, we are working with the Competition Bureau, which has the responsibility for competition policy in Canada. In the last year, for example, they have released draft guidelines for application to abuse of dominance provisions in the grocery industry, so they have been looking at that. They also had three background papers that dealt with it. Finally, they have released Enforcement Guidelines on the Abuse of Dominance Provisions. I could go into more detail, but the answer is that we are working very closely with the Competition Bureau and are watching the situation.

    Mr. Mark Eyking: On that, it's easy to analyse it and try to deal with it, but we also have to be realists here and help farmers adjust for what's happening, whether we encourage cooperatives or some kind of marketing structures or what not.

    Anyway, go ahead.

    Mr. Tom Richardson (Director General, Farm Income and Adaptation Policy, Strategic Policy Branch, Department of Agriculture and Agri-Food): The question of averaging on programs is one that does preoccupy the industry. We had a meeting a couple of weeks ago with the minister's safety nets advisory committee, and we spent about an hour looking at different scenarios, middle three of the last five years, last five years, last three years. Unfortunately, there's no easy answer to it, but it certainly is the case, particularly if you go to the last three years, that a producer could have, say, one bad year due to a failed crop, another year bad prices. So on a three year average, they've only got one good year in there. This is an important issue. As part of our consultations with the industry over the next few months, it's definitely on the table, and we're focused on it.

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    Mr. Mark Eyking: And on NISA?

    Mr. Tom Richardson: It's the same issue. You get a number of situations, but one is that you may have a farm that has relatively stable income, or the income of the farm may be declining somewhat gradually. The individual has built up an account. They feel that the revenue or the income from the farm is not adequate, and yet, in respect of a stabilization trigger, they can't get their money out. The farmer feels the business isn't returning enough money, he's saved this money, and he can't get the money out. For family income up to $35,000 you can take out up to the family income, so that solves the situation for some farmers, but when you're above that, it doesn't work.

    I think it comes down to the objective of the program. If the program is designed to stabilize, and you have a situation where, basically, the income is gradually declining, it's not going up and down, then you have that dilemma. It's an issue. At this point no answer has been put on the table to try to deal with that kind of situation. I could check to see if we have information on how frequently that occurs. We have looked in the past. It does occur, but I don't think the incidence of it is perhaps as great as some have thought. I don't have information on it. I could try to get some.

    The Chair: Thanks, Mark.

    Rick.

    Mr. Rick Borotsik (Brandon—Souris, PC): First, Mr. Deacon. I would really appreciate a breakdown of the programs, the transfers you indicated you had. There's $1.185 billion in transfer payments from the department. I assume--help me with this--that includes all the companion programs, the crop insurance, the NISA, the CFIP. Do you have the breakdowns of those dollars in that $1.185 billion?

    Mr. Bruce Deacon: Yes, those are broken down in part II of the estimates, and we can give you a copy, if you wish.

    Mr. Rick Borotsik: Perfect. I would really appreciate that.

    Mr. Bruce Deacon: They are broken down. They are also grouped again by the business lines, but in more detail.

    Mr. Rick Borotsik: Perfect. I thank you very much. I would love to have that, just to make it comparable.

    In the estimates, and I touched on this this morning, the adjustments, which are the supplementary expenditures, obviously, last year were about $720 million. Is it common for the department to use that as sort of a wiggle room, not being able to identify any dollars that can be put into that adjustments column?

    Mr. Bruce Deacon: Virtually every year departments will have supplementary estimates, and you have two periods in the year when you have supplementary estimates. It will vary from year to year. It's purely a question of timing as to when things are approved by cabinet and when subsequently things are approved by Parliament. We can only include things in estimates once they have been approved by Parliament. So it's really a question of timing.

    Mr. Rick Borotsik: We hope that's a $1.3 billion number, but we won't go there, because I know that's not your department.

    Mr. Wettlaufer, your number for the PFRA budget is $125,799,520 approximately. Of that there are two numbers I'd like to have you explain to me. There's the prairie grain roads program, and if you add the two numbers together, you have about $47 million. One of those numbers is referred to as “a re-profiling of the prairie grain roads program due to delays”. Can you just touch on that re-profiling, the $12.8 million?

    Mr. Bob Wettlaufer: When the program was approved, I think it was a $175 million program. We lay out an expenditure profile that we think will happen. The expenditures that actually occur are dependent on provincial negotiations, they're dependent on weather conditions, they're dependent on construction progress, and many variables.

    Mr. Rick Borotsik: So you had anticipated expending this money before, and now you haven't, so you bring it forward. Is that the way it works?

    Mr. Bob Wettlaufer: That's correct.

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    Mr. Rick Borotsik: You also have $10 million that you've identified as the program integrity 2 funding for water infrastructure in Saskatchewan. In 30 words or less, can you tell me what that is?

    Mr. Bob Wettlaufer: That's largely for the repair of Duncairn Dam. It's a health and safety issue. We are doing that this year.

    Mr. Rick Borotsik: Okay.

    Can you tell me what your rural water development program actually is? Is it $5 million? Was there not another expenditure of some $3 million just recently?

    Mr. Bob Wettlaufer: Yes.

    Mr. Rick Borotsik: What's the total number for the year 2002-2003?

    Mr. Bob Wettlaufer: The total rural water development expenditures for 2002-2003 are $12 million. That is made up of $6.5 million in technical assistance and $5.5 million in--

    Mr. Rick Borotsik: I appreciate that, and I understand that the $6 million of technical assistance is very important, but the actual grant capital available is $5 million or $ 6 million.

    Mr. Bob Wettlaufer: The grant money is $5.5 million.

    Mr. Rick Borotsik: Okay. Thank you.

    This is my last question, and I don't know who's going to answer it. We know full well, in fact Veneman just came out and said, the country of origin labelling is going to be implemented within the two-year program that is outlined in the U.S. farm bill. We have lots of very bright people here. Has anybody in the department analysed what the cost of that country of origin labelling could mean to the livestock industry in Canada?

    Ms. Suzanne Vinet (Chief Agriculture Negotiator, International Trade Policy Directorate, Market and Industry Services Branch, Department of Agriculture and Agri-Food): They've been talking about country of origin labelling for some time, and the industry has come up with some numbers. Even the U.S. industry, in fact, has come up with some numbers to show that it might cost the U.S. industry around $1 billion for implementing that. So there's a lot of resistance, both in the U.S.—

    Mr. Rick Borotsik: Have we analysed what the cost would be to Canadian producers?

    Ms. Suzanne Vinet: There's some analysis going on. I know the Government of Alberta is doing some analysis. We're collaborating with the industry and we're looking at the numbers--

    Mr. Rick Borotsik: Is our Department of Agriculture not doing that analysis?

    Ms. Suzanne Vinet: We are doing the analysis, but we haven't seen the regulations to show specifically how it's going to be implemented. We have some past analysis as to what the impact of COL might be on the industry, but in respect of the actual current legislation, since their regulations are not even enunciated, we don't have that analysis.

    Mr. Rick Borotsik: Okay. Is there a ball park number?

    Ms. Suzanne Vinet: The ball park is about $1 billion in cost to the industry in the U.S.

    Mr. Rick Borotsik: Is that number available for Canada?

    The Chair: I'm going to have to come back to you.

    Paul.

    Mr. Paul Harold Macklin (Northumberland, Lib.): Thank you, Mr. Chairman.

    There are a few varied issues I'd like to touch on. We've looked at encouraging diversity of the various meat products, and yet I am made aware that we don't seem to be setting up, or at least don't seem to have in place, enough federally inspected abattoirs to deal with the export of that meat. If that meat isn't properly inspected, it's not suitable for that export market. Could you tell me what we are doing in that area, if anything, to better serve those who are going into these diversified meat products in Canadian agriculture?

    Dr. André Gravel: I can certainly answer on behalf of the agency about providing the service to those establishments that actually meet the requirements of the regulations. The agency so far hasn't refused to provide inspection service to any facility. In fact, it has caused us, over the years, some difficulty with providing inspection service when a large establishment, such as the one in Brandon Manitoba, has opened up. But beyond that, if industry sectors are looking for interpretation of regulations or standards, the agency can provide that.

    Investing in that sector, of course, is not our mandate. We're an inspection provider.

    Mr. Paul Harold Macklin: I take it there are two different sets of standards for that type of facility, a provincial standard and a federal standard. Is there any attempt being made to coordinate those standards and to try to bring them into uniformity, so that we wouldn't have this problem?

º  (1620)  

    Dr. André Gravel: You are right in indicating that there are potentially two standards in meat inspection, a federal standard and a provincial standard. The provincial standard actually varies between provinces. Some provinces have mandatory meat inspection, others don't. The agency has been involved in the development of a meat code, in an effort to create some uniformity among provinces. That meat code is now a finalized document, and it will be up to provinces to make reference to that meat code in their own regulations, to ensure that there is only one standard. I think we are not quite there yet. Some provinces are willing to do it, others are not quite at that stage. But if any province wishes to refer to a common standard, it is there, and it has been done in cooperation with provinces and territories. There was input provided by them.

    Ms. Yaprak Baltacioglu: To add to that, as part of the agreement that was reached in principle by the federal-provincial-territorial ministers of agriculture, food safety and quality is one of the top priorities of this particular framework. As more details are being developed for a federal-provincial agreement, this very issue has come up in discussions between federal and provincial officials. We are hoping that in June, or whenever the ministers would agree to this policy framework, there will be commitments made, so that there is harmonization across the country, so that industry has all the tools it needs, but also so that we have a capacity to say to the world, in Canada this is how things work.

    Mr. Paul Harold Macklin: Second, with respect to another area, although still dealing with food safety, within my riding I have a plant that makes chocolate, and they have been trying to work within the HACCP program and have been unable to get themselves HACCP-approved. My understanding is that there is a limitation in the process of people who are available, inspectors or whatever. Can you tell me what we are doing to deal with that type of issue and try to raise the standards within our food supply?

    Dr. André Gravel: Very clearly, the agency is a strong proponent of HACCP throughout the food chain, whether it is at the farm level, at the processing plant level, or at the distribution level. We see it as the way to increase food safety throughout the food chain. As to resources that the agency can dedicate to the recognition of processing plants, we put a higher priority on registered establishments, whether it's a registered meat establishment, fish establishment, or fruit and vegetable establishment. Commodities that fall under the food and drug regulations, such as chocolate, would be a very important area, but we would definitely like to finalize our efforts in the registered sector first.

    Mr. Paul Harold Macklin: Is that due to a shortage of personnel or just an allocation of resources?

    Dr. André Gravel: I don't want to bore this committee with the legislation, but as far as registered commodities are concerned, we have a mandate to provide inspection. We register plants, we make sure the standards are met, and we actually have inspection presence there, it is mandated by regulations.

    In the case of other food processing sectors, the first jurisdiction, if a commodity is not registered, is with the province. So the province has a very important role to play in providing an oversight for product that doesn't move between provincial boundaries, doesn't get exported, or is not a registered commodity.

    So basically, that is what it is. There is a question of mandate, and there is a question of resources as well. There are a great number of facilities producing food in Canada that don't necessarily fall under the jurisdiction of the Canadian Food Inspection Agency.

    The Chair: Paul, I have to move on.

    David.

    Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): Thank you, Mr. Chairman.

    Over the last year or so we've worked hard to get crop insurance strengthened. It hasn't been strengthened, it continues to be not a strong program, but a poor program for many producers. We were talking to you, Mr. Hedley, a month ago here. You indicated to us that there was no money at all committed or being considered to deal with the drought and that you have no plan in place to deal with that. Have you got any new initiatives in the last month you can tell us about, money committed to this or a plan to deal with it? The drought continues.

    One of my RMs—I've asked most of them for responses—comments about their conditions:

Moisture will be adequate to get crops to germinate, but we have no subsoil moisture at all. There's absolutely no feed carryover from last year. Native grass pastures are in very poor shape. There is no pasture land in the area to lease. Many farmers have reduced their herds. Most dugouts are dry. Forage production for 2002 has been harmed to the extent that most cattle owners who have moved cattle to other locations do not intend to have them return until the spring of 2004. And the council has considered a designation of the municipality as a disaster area, but sees no reason to do that, because they don't see that there'll be any help coming to them.

    Have you taken any new initiatives in the last month?

º  (1625)  

    Mr. Douglas Hedley: As the minister indicated this morning, we are looking really at a two-pronged approach. The first is the investments to prepare the industry for the future, and we have described those through the agricultural policy framework. The second is a package of arrangements to get from here to there. What I would say is that we are looking both short and long run for strengthening those packages. We are working now with the provinces and the safety nets advisory committee to look at ways we can strengthen crop insurance, offer it to more crops, expand and enhance its coverage.

    Mr. David Anderson: I'm really concerned about what's going on in the department. We've got three major issues here. There's the U.S. farm bill, and we heard your department isn't prepared enough that they've even considered the cost of one of the major provisions of that. We have a major drought in western Canada, there's no plan for it. And we have this APF system that's coming in, we're into the second year of the plan already, and we still have no details on it. I'm getting really concerned about the future planning--30% of your budget is being run through supplementary estimates. What's going on that you're not prepared to deal with three of the major issues on the ground for Canadian farmers? Why not?

    Ms. Yaprak Baltacioglu: Let me reiterate what our minister said this morning. We recognize the challenges that are out there. We recognize the huge challenge Canadian farmers face because of drought. Our minister expressed, if I remember his words correctly, his concern and his disgust at the way the U.S. farm bill has been put in place and the potential implications for Canada.

    The agricultural policy framework was agreed to in principle as broad objectives last June. It has been one year, and we have been developing the details along with the sector. The broad lines we consulted on. We are going to be consulting in more detail on the objectives and potential implementation measures in the coming weeks, and once the federal and provincial ministers have made a decision about those directions, we will have to work with the sector on what types of programs need to be in place in 2003. Our minister recognized, however, that we have to get from here to there, and there are short-term pressures. He said he is working on a package, we are serving him properly, and he is confident that he'll have the funds for that one. He did not commit himself to a particular timeframe, but we are working very hard and quickly on that.

    Mr. David Anderson: You're far behind in the reaction time. We knew a couple of years ago the farm bill was coming down, we had an idea months ago what it would involve. Parts of Alberta are into their third year of drought, parts of Saskatchewan into their second year. It's not good enough to make excuses. We can sit and consult here, our careers go on. People are losing their farms while we consult, and we need to be reacting ahead of time, rather than waiting two and three years to react to something.

    I'm going to change my topic a bit and talk about value-added. The report talks quite a bit about that, and the framework talks about that. We travelled in Ontario a bit as a committee, and we saw and heard the benefits in the grains and oilseeds sector from their being able to market their own grains. I heard about the value-added that's being developed there. In the west we have a somewhat different marketing system. The big firms seem to be doing fine, getting access to cheap wheat. We're talking to smaller firms who are trying to value-add grains particularly. They feel intimidated and threatened by the Wheat Board. If they complain, they are threatened with delay of their permits and those kinds of things. Have you done any study of the cost to western Canadians of maintaining the present marketing system we have, the cost of the value-added that is prevented there?

º  (1630)  

    Ms. Yaprak Baltacioglu: With your permission, I would like to ask Mr. Howard Migie, director general of marketing systems, to answer that question.

    Mr. Howard Migie (Director General, Marketing Policy, Strategic Policy Branch, Department of Agriculture and Agri-Food): There have been three major studies on the Wheat Board, and the last one was a benchmark study Richard Gray did that shows the—

    Mr. David Anderson: Mr. Migie, the Wheat Board hired him to do that study. I am sick and tired of hearing about that benchmark study, which measures nothing except the advantage of the Wheat Board. Farmers in my communities are not being allowed to value-add. I would like to know, have you done a study on the cost of value-adding? I don't want to hear about marketing comparisons between the U.S. and Canada. I have looked at the study, and lots of the data are suspect. I want to hear about value-added. You are preventing that from happening.

    Mr. Howard Migie: I was about to say that study also looked at both domestic markets and international markets, so in that sense, it is getting at the question of pricing in both domestic and international. Then there were two studies a number of years ago that had opposite conclusions, one looking at the question of additional costs associated with Wheat Board marketing. Colin Carter led that particular study, and then there was another study by Kraft-Furtan-Tyrchniewicz. So the economic analysis has been inconsistent, and in some cases they are saying the farmers are getting a higher price from the domestic market. The Wheat Board themselves, as you know, have shown efforts with value-added to try to respond by offering different programs. The flour mills seem to be much more satisfied with the pricing arrangements, the maltsters much less so, but they have tried to have a pricing regime that is much better in respect of value-added than it was a number of years ago. So it has evolved in that direction.

    The Chair: We did get the answer, and maybe we will come back.

    Dick.

    Mr. Dick Proctor: Thanks.

    I would like to come back to the PFRA. Maybe I will ask my question, and then I want to go to CFIA, and the officials can perhaps get the information while we are dealing with CFIA.

    With the $126 million that has been raised several times, can somebody please break down, say, the top three or five items of what constitutes the bulk of the spending on PFRA?

    In the meantime, Dr. Gravel, page 43 of the Canadian Food Inspection Agency report indicates that there is a fairly hefty increase in the main estimates for this year's budget, if I'm reading it correctly. I am always suspect when I'm reading financial statements, but it looks like your budget has gone up by about $100 million. I apologize, maybe you said this at the outset when I wasn't here, but perhaps you could take us through what the major increases are for.

    Dr. André Gravel: I'm a little like you on financial statements, so I will ask somebody who can speak with some degree of assurance, our comptroller John Jones.

    Mr. John Jones (Comptroller, Canadian Food Inspection Agency): That is correct. The main estimates for 2000-2003 are increased by $101.6 million when compared to 2001-2002. A large portion of that is the increase of $36.2 million in funding for public security and anti-terrorism activities, really to address three main areas: to enhance border controls, to increase surveillance and detection activities, and to upgrade related science and laboratory capacity.

    The CFIA was also provided with an increase of $30 million in program integrity money, which really is a non-discretionary workload increase. There was also $14.8 million provided on an ongoing basis to increase the CFIA's capacity to sample and analyse drug residues in meat products. Also, $12.9 million has been provided for increases in payroll costs due to signed collective agreements. A further $5.9 million was provided in 2000-2003 to continue the comprehensive three-year plan for plum pox, a virus that affects Canada's tender fruit industry. There's a transfer of $2.5 million from Agriculture and Agri-Food for the matching investment initiative, which is really collaborative research activity. There's a statutory increase of $1.2 million for employee benefit plans, and a net increase of about $200,000 for adjustments to all reference levels relative to funding initiatives.

º  (1635)  

    Mr. Dick Proctor: Thank you for that.

    I just want to go back. The second item you mentioned was a $30 million figure, in round numbers, but I didn't catch what that was for.

    Mr. John Jones: It's $30 million that was provided under the program integrity funding, and it's really to address the non-discretionary workload increases, volume increases, in the inspection and regulatory activity.

    Mr. Dick Proctor: Okay. Thanks for that.

    If I read this correctly, the number of staff at the Canadian Food Inspection Agency is actually fairly static. Is that correct, or has there been a big increase in staff?

    Mr. John Jones: It has increased, roughly, since its inception from about 4,300 to over 5,000 at the present time.

    Mr. Dick Proctor: With this large increase in money, are additional staff envisaged, full-time equivalents?

    Mr. John Jones: About 300 FTEs are included in the increase between the previous levels and what would be substantiated by this funding increase.

    Mr. Dick Proctor: Okay. Thanks.

    To the PFRA, can you help me out on those numbers?

    Mr. Bob Wettlaufer: I will try to break down our budget. Sixty million dollars is for salaries and operating; that includes all staff costs to operate things like pastures, the shelter belt centre, southwest irrigation projects, technical support for the rural water program, soil conservation activities, and things like that. Major capital is $13.5 million; that includes, as noted earlier, repair of some structures such as the Duncairn dam, also the capital work done in conjunction with our pastures. Our grants and contributions budget is $51.6 million. The lion's share of that is the prairie grain roads program, estimated to be for this year $46 million. That takes us up to our $126 million.

    Mr. Dick Proctor: Just in the three programs then, Bob?

    Mr. Bob Wettlaufer: Yes.

    Mr. Dick Proctor: Thank you.

    The Chair: My addition is probably a little bit off, but I'm a little confused with this. They're for three prairie provinces, is that correct, all those figures? Nova Scotia has had quite a problem, especially in Annapolis Valley, in the last three or four years, and they had a similar program trying to bring irrigation and water sources to the farmers there. Is that under a federal program, or is the federal department involved in the program that was offered in the valley?

    Mr. Bob Wettlaufer: Not to my knowledge, sir. This past year, under a special program the minister announced, a $3 million special program for water, we spent about $300,000 in Nova Scotia doing studies and leading some seminars, but that is the extent of our involvement, and it was only this year.

    Mr. Tom Richardson: The only thing I would add, Mr. Chairman, is that Nova Scotia did use some of its safety net money, its companion program money, because they felt that mitigating the drought by taking action would help stabilize income. So they did spend some safety net money on that a few years ago.

    The Chair: Is there any comparable money spent in, for example, Québec, Ontario, Atlantic Canada, British Columbia that would give them some assistance in their programs? This is a lot of money from your overall budget. Is it only for three provinces?

    Mr. Bob Wettlaufer: We do a bit of programming in the Peace River region of British Columbia, because it is contiguous with the Peace River region of Alberta. They're very similar. But that is the only area in British Columbia where we provide any assistance. We have an office in Dawson Creek. But yes, it's the three prairie provinces and that small area of British Columbia.

    The Chair: And there's no similar allocation of moneys to Ontario, Québec, or Atlantic Canada? Is that correct?

    Mr. Bruce Deacon: As far as I know, that's true.

º  (1640)  

    The Chair: Is it because they have never asked? Especially, I think, in Nova Scotia, my sister province, which Mark is from, they've had some heavy hits in the last few years. Have they never asked? Or why have we never responded?

    Mr. Bruce Deacon: I think Tom Richardson may want to comment further on this, but one of the points he was making was that some of those provinces are covered through provincial programming or through provincial programming that draws indirectly on federal programming. But we don't have dedicated money, as we do in the three prairie provinces.

    The Chair: Let's go back, then, to the Province of Nova Scotia. You said they draw on federal money. How much money is planned for them to be able to draw on in the year 2002-2003? How much is available to Ernie Fage, the minister from Nova Scotia, through CARD? This program, prairie farm rehabilitation, includes roads, includes a lot of different things, technical advice. It's a long list you gave Mr. Proctor. Can Nova Scotia or New Brunswick gain access to some comparable...? It's a very significant part, this $126 million.

    Mr. Douglas Hedley: Through the CARD program, we do offer activities in support of soil and water conservation development. We can get those numbers for you, a breakdown by province. I do not have those with me. The regional agencies in those provinces also are doing some of that work in support of water infrastructure. I can get you the breakdown of the CARD money available.

    The Chair: So, Mr. Hedley, is it because those provinces haven't asked or because we have never offered? What is the problem? CARD is a very small part of this overall budget. What's the budget for CARD for all of Canada?

    Mr. Bruce Deacon: Approximately $60 million.

    The Chair: Sixty million dollars for 10 provinces and our territories. These three prairie provinces also have access to CARD, is that correct? I'm from Atlantic Canada, and I'm trying to get some answers for them. Mark, would you like to follow up on this at all? You're from Nova Scotia.

    Mr. Mark Eyking: I'd just say, you'd better change your books and give us some money out there. I don't know, Charles. In fairness, maybe we never experience as many dry years. In the west it seems that every three or four years you get a dry year. Maybe that's why these programs were set up. But it's right across Canada now, and I think it's something the department should look at, because we have just as many problems in the east as they do in the west now with dry spells, two years in a row, especially, as you said, in Annapolis Valley. So I think it's something to look at.

    We talked about that this morning. We should look at Canada-wide programs available to farmers, the same in each province. The reason given by the minister this morning, and he was correct, was that it's hard to do it because provinces do their own thing sometimes when you have agreements. But when we have just federal programs, we should be focusing on having them the same right across the country, so you don't have one farmer getting a better deal than another. We often talk about the United States and Europe making special agreements we can't make, putting us not on a level playing field. We should do that within our own country before we criticize other countries. I think it's something to look at, because it's becoming a bigger problem in eastern Canada, the lack of moisture. We could bring it up.

    The Chair: Howard.

    Mr. Howard Hilstrom: I have a couple more questions. I guess I'll just finish off the CFIA. The World Cup, of course, is on over there in South Korea, and they've got a massive outbreak of foot and mouth. What special security arrangements, over and above the existing ones, have you made in regard to travellers coming back from Asia, specifically South Korea?

    Dr. André Gravel: Thanks for finishing off the CFIA. We appreciate that.

    The CFIA will, as usual, take very great precautions concerning introduction of foot and mouth disease from foreign countries. As a result of the additional money the CFIA got--our comptroller mentioned $36.2 million--a proportion of that has been set up to increase our presence at the border. A proportion of that has also been spent to increase the presence of detector dog teams. Our intention is to have detector dog teams in all international airports. In the past we had them in Montreal and Toronto, we now have teams stationed in Calgary, Vancouver, Toronto, Montreal, and Halifax. That's a measure that can be implemented not only for the soccer games in Korea, but to prevent the risk of introduction of foreign animal disease coming from anywhere. We're also considering providing travellers leaving Canada to go to Korea with some pamphlets to warn them against introduction of foreign animal diseases. I think the efforts the agency has deployed for the prevention of introduction of foot and mouth disease from the U.K. are still valid, and we want to build on that to focus on what's going to happen in Korea and Japan.

º  (1645)  

    Mr. Howard Hilstrom: I raised this because in the livestock industry, hogs and cattle, we are working and we make money most years, and we want to see that continue. That is why I have got that big concern with TB and these diseases, let alone bioterrorism; if we can't control TB, it seems to me we have a real problem if terrorists ever strike. But we will leave that for now. I have finished off the CFIA. I would like to finish off the PFRA now.

    How many pastures in Saskatchewan and Alberta operated by PFRA are not going to be accepting cattle this year?

    Mr. Bob Wettlaufer: We only operate one pasture in Alberta, on the Suffield military range. The rest are in Saskatchewan and Manitoba. We don't know yet, but we think maybe five in west central Saskatchewan. If we don't get some rain in the next week or two, I think we will have to close about five of them. The stocking rates in quite a few others are down quite a bit.

    Mr. Howard Hilstrom: I was talking to some pasture riders from the Kindersley area last fall, and they indicated that they were initially looking at cutting 50%. I think they've probably gone to nothing now. That is just a good indicator of how bad it is there.

    With Agriculture and Agri-Food Canada now, how much involvement, Mr. Deacon, are you having in selling off these hopper cars that are owned by the government? Have you got any involvement in that--not you personally, but the department? There is our marketing guy coming, that's great, Mr. Migie.

    Mr. Howard Migie: We work closely with Transport Canada on all the grain transportation issues, and the Minister of Transport has indicated his intention to sell the hopper cars. Transport Canada has asked for reviews on terms and conditions from various people in the industry, and the next step would be for the Minister of Transport to propose to his colleagues what terms and conditions he wishes to apply for the sale of the cars.

    Mr. Howard Hilstrom: So that is being worked on, and the department is involved.

    On the whole grain handling industry, is the department satisfied that with the larger producer car loading facilities that have been built and are going to be built in the future, those farmers are sufficiently protected against financial loss? I guess that's partly the Canadian Grain Commission. Are they sufficiently protected? I hope somebody can answer that.

    Mr. Gord Pugh (Director General, National Affairs, Canadian Grain Commission): As you are probably aware, Mr. Hilstrom, the commission announced on April 29 that producer car loading facilities would be exempted from being licensed as primary elevators. There are advantages that go with that, but one of the disadvantages is that producers who deal with those facilities are not covered by the normal bonding requirements of primary facilities.

    Mr. Howard Hilstrom: So those farmers should be well aware that they need to cover themselves with private insurance, or whatever terminology is correct?

    Mr. Gord Pugh: That is correct. If they are concerned about the issue of financial failure of a facility or security of their grain with that facility, that is obviously one thing they wish to take into account.

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    Mr. Howard Hilstrom: Yes, that's a pretty serious concern all right.

    The Chair: I want to go to Dick, and then back to Paul.

    Mr. Dick Proctor: Thanks very much, Mr. Chair.

    Statistics Canada reported in the 2001 census that for every dollar Canadian farmers earn they actually spend 87¢ on cost. That leaves, obviously, an incredibly slim margin, and it is probably one of the main reasons so many have been forced out of farming of late. The farm leaders, or some of them anyway, are asserting that government cost recovery is part of the problem. They're saying that some attention was paid to this issue a few years back--probably, they're referring to the 1998-2000 period--but since then not much has been done. So I am interested to know whether there is a recognition in the department that this is indeed a problem?

    Dr. André Gravel: If you're referring to cost recovery with CFIA's activities, I can maybe provide an answer on that. You will probably remember that the minister has decreed a moratorium on cost recovery. That moratorium is still standing. CFIA hasn't increased any of its inspection fees over the last few years, and doesn't intend to. The only exception to that would be if there's an industry sector that wishes to get a service, they're willing to pay for it, and they make that request to the CFIA, in which case we will be in agreement to provide the service, provided it's cost-recovered 100%.

    The CFIA published in part I of the Canada Gazette a proposed regulation to control medicated feed a year and a half ago. It was made very clear to the industry at the time that no regulatory initiative wouldn't be cost-recovered.

    Mr. Dick Proctor: Thank you for that. I probably need to invite Dr. Migie back, because I want to ask about the Wheat Board and genetically modified wheat. We're aware that Monsanto is going ahead with its test plots, aided and abetted, I guess, by Agriculture and Agri-Food Canada. We're interested in knowing where this is and how long you think it will be before there's a request for licensing to go ahead and produce it?

    Ms. Yaprak Baltacioglu: I think this is a better question for Bob Carberry from the Canadian Food Inspection Agency.

    Mr. Bob Carberry (Vice-President of Programs, Canadian Food Inspection Agency): I can provide you with an update on where we're at right now. We have had a general indication from Monsanto that they do intend to apply for review shortly, possibly within the next few months, but even on that timeframe, we would probably put off any commercialization for at least the next two years. In essence, that's where we're at right now. We're preparing to do any scientific reviews that are necessary.

    Mr. Dick Proctor: Will any future licensing be based solely on scientific reviews, or will it be on a broader scan than that? As you well know, the Canadian Wheat Board has grave concerns about its ability to sell into our traditional markets with genetically modified products.

    Mr. Bob Carberry: From our standpoint, the CFIA's role is to do the scientific assessment only. We'll be looking at the environmental and feed safety, and we'll be looking to work with Health Canada on the food safety element.

    Mr. Dick Proctor: Howard was making a comment about the board. He was saying the one he really wanted to finish off was the Canadian Wheat Board, not the PFRA or the CFIA.

    Finally, on the Canadian Grain Commission, we were curious to note that the chief grain commissioner and the deputy were just appointed for a six-month period, whereas it's normally a five-year period, and then one person from Manitoba for six months. What's the rationale for a six-month appointment for the chief grain commissioner and the two assistant commissioners?

º  (1655)  

    Mr. Gord Pugh: Mr. Chairman, that's a political question I really can't address.

    I would just add, though, in relation to cost recovery--your earlier question, Mr. Proctor--we are also under a freeze until March 31, 2004, and as a practical matter, there has been no change in CGC fees since 1991.

    Mr. Dick Proctor: Right. Thank you. But is there anybody here who can answer a political question on the Grain Commission?

    Ms. Yaprak Baltacioglu: We're officials. I think this question is better directed to our minister.

    Mr. Dick Proctor: Well, that's the problem when you only get five minutes to ask the minister, but thank you. That's all, Mr. Chair.

    The Chair: Paul.

    Mr. Paul Harold Macklin: I'd like to look at the research side of agriculture, and I'd like to zero in on, first, how much money we are spending in research and how we break it down between primary research and research in the value-added side. And are we doing partnership research as well, where we're working with private sector partners, and if so, to what extent? Can I first get some indication as to where we are on that side?

    Dr. Gordon Dorrell: The budget this year is roughly the same as it was last year, approximately $270 million, which includes salary construction, operating costs, and so forth. So that is the magnitude of the departmental science budget.

    We don't traditionally break it down into primary, secondary, tertiary, and what not, because I guess we are trying to work through the whole value chain. It is awfully hard to know when primary production stops and value-added starts. The real benefit is that they are all part of the same chain. For our business lines and the way we organize our science, we've divided it into food safety, sustainable production systems, environment, and things like that. So if you are interested, I could give you those numbers. That really tells you the priorities the department is putting on, and it's the priorities that you will hear us talk about in the APF.

    Mr. Paul Harold Macklin: In my travels across this country with the task force, when we were looking at various areas within agriculture, it came to be very clear that a lot of farmers were concerned that there wasn't enough money being placed in primary research, as opposed to those dealing with the Monsantos, in partnership or on their own. They were more concerned about the preservation within the public purview of primary research and trying to avoid its becoming “patented” or taken out of the public domain. Are we doing that sort of research through the department?

    Dr. Gordon Dorrell: The bulk of the department research is public good, and that is not a matter of whether it's primary, secondary, or basic. The vast majority is public good. For example, our sustainable production systems represent about 60% of our total budget, and a relatively small portion of that would be research that leads directly to patents. Most of that is information available to everybody, whether it's insect forecasts, the maintenance of a gene bank in the country, new rotation systems, a broad array of things we don't charge for. When we produce varieties, we do transfer those to companies who market them on our behalf and we collect a small royalty, but those tend not to be totally exclusive.

    Mr. Paul Harold Macklin: Is Agriculture Canada moving away from that primary research area it was traditionally in?

    Dr. Gordon Dorrell: I think over the years there has been a shift from almost a dominance for primary production. If you go back to the origin of the research branch, the Experimental Farm Stations Act, that was when agriculture was in its frontier days. So virtually 100% was primary production motivated. Over the years it's shifted, and as a consequence, we are doing far more than ever before in the processing area. We are putting more emphasis, for example, on bioproducts, trying to extend the commodities into a more valuable component. So I guess there has been a natural evolution away from the primary side, which can look after itself fairly well.

    Where it can't look after itself very well is, for example, in the evolution of diseases. We were working in rust in the twenties. We have transferred probably 65 genes into wheat, for example, so that the crop is still resistant to rust. We will go on in that area forever. Is that value-added research, or is that primary production?

    You mentioned interaction with companies. Our matching investment initiative allocates resources to collaborative research, roughly about 50-50 into the medium to large companies and the smaller companies and producer groups. So it's a balance, and that is also an interesting mixture of production-type collaborative research right down to specific products.

»  (1700)  

    Mr. Paul Harold Macklin: When we talk about that collaborative research, are we talking about research that would be with universities and other post-secondary educational institutions, where you would be in partnership, or are we talking about corporate partnerships, or a combination thereof?

    Dr. Gordon Dorrell: We are basically talking about three things. The matching initiative is to try to accelerate the transfer of federal technology into the sector so it's used, and that is companies as well as associations. We have a very active and aggressive collaborative research program with universities, and that tends to be more academic. We are working on discovery research together. The third thing, which is evolving more each year, is the interaction we have with sister departments, whether it be Health Canada or Environment Canada, where we are taking our capacities and bringing them together to solve joint problems of interest to Canada. So it is quite an array of different types of collaboration.

    The Chair: Before I go to Howard, we get some concerns expressed in certain farm groups that the federal government is assisting some major companies to develop patents on particular things. Are we doing that or not with the Monsantos and other big companies that are eventually saying, I've a patent on this seed, or whatever? Is there any federal money going into assisting companies to develop products on which they are obtaining patents? Bruce, could you answer that, or maybe Gordon?

    Dr. Gordon Dorrell: I'll take the first shot at it. Traditionally, if Agriculture and Agri-Food Canada's innovation side makes a discovery, it tries to determine whether that discovery is best protected in the interest of Canadians by either patenting it or protecting it in some way with know-how. Other discoveries are made public very quickly or moved through the system. If the use of the discovery is best covered by a patent, we then seek a partner. The Government of Canada owns the patent and the patents are licensed either exclusively or broadly to companies. We would not be transferring funds to a company for them to develop a patent. The way we operate is, the government holds the patent, it's our discovery, and somebody else carries it forward to the marketplace.

    The Chair: We have that situation in Saskatchewan with the canola, and apparently, they're working now with wheat, developing a GMO wheat. Are we investing in that program? That's what I'm asking. Are we investing in that program, where so many people are concerned about it? And we have rumours that there are plots in Prince Edward Island. We have rumours that there are plots in certain western provinces. Are we, as a government, involved in the development of a product that some company is going to take and say, I have the patent on that product, so that if some farmer uses a second generation of that seed, they can take him to court and say, you have wrongly used our patent? It's a basic question, Gordon: are we involved in that process and contributing money towards it? Yes or no.

»  (1705)  

    Dr. Gordon Dorrell: It's really a no. That's not really how we prefer to operate.

    The Chair: I have a couple of our western writers here, and some of their readers do say Canada is investing in this process, and how can a company get the patent to it after our government has put money towards it?

    Howard.

    Mr. Howard Hilstrom: Those are good questions, Mr. Chairman. I've got a couple of questions, and one is going to be on international trade, because Suzanne hasn't had a chance to talk yet.

    First, I'd like to talk a little about the administration of the CFIA. Mr. Pierre Tremblay is no longer signing off, I understand, on advertising or promotional campaign contracts that are awarded by the CFIA. Is that true?

    Dr. André Gravel: It's true.

    Mr. Howard Hilstrom: Okay. So he's not reviewing these contracts either, somebody else has been appointed to do that?

    Dr. André Gravel: Monsieur Tremblay has requested that the authority of approving contracts be removed. That authority has been shifted to the comptroller's office and the service centre that deals with contracts at this time in the agency.

    Mr. Howard Hilstrom: So they didn't have to hire anybody new or anything, and somebody in the comptroller's office is taking care of that. I think that's kind of reassuring for farmers.

    My next question is on GMOs again. Our committee had an informal meeting with the Chinese agriculture delegation, the chairman and other people--I'm not sure what their exact jobs were. It's our understanding that China grows GMO oats, wheat, soy beans, and corn. From our trade negotiations, is that true? Do they grow GMO crops over in China? If so, why do we get these reports that they're against our GMO canola?

    Ms. Suzanne Vinet: I don't know whether it is true that they grow GMO crops. I would have to verify that and confirm it for you. Maybe Dr. Dorrell has the answer.

    Dr. Gordon Dorrell: I believe China is one of the major producers of GMO cotton. If you're talking about food crops, the Chinese for some time have had a very active and aggressive biotechnology program on a broad range of crops, just as the Government of India has. Whether these are in the marketplace is a second question.

    Mr. Howard Hilstrom: Okay.

    We know we're in the very early stages of these WTO talks and that. The Prime Minister has told us that he, in his efforts to help the poorest of the poor countries, is willing to import anything but supply-managed commodities. Is that departmental policy now in effect, or is this just something in the musings of the Prime Minister?

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    Ms. Suzanne Vinet: The initiative you're referring to is really part of a consultation process we've initiated to see how much further we could go in offering improved market access for the least developed countries. There was, through the gazette process, a consultation. The fact is that we already allow imports of supply managed products, dairy, poultry, and egg products, within the tariff rate quotas, and the government policy, as part of any improvement to market access, is to exclude treatment of over tariff rate quotas. It's just a continuation of the government policy. As part of the consultation, we looked at receiving comments from the industry across the sectors as to what would be the possibility of improving market access for least developed countries. Comments have now been received, the period for comments is now closed, and the government is reviewing the comments before making recommendations.

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    Mr. Howard Hilstrom: This is tremendously important. I really believe we should be as open as possible to accepting imports of anything, including supply management products, from the poorest of poor countries, in order to enable them to quit living in poor conditions and have an income. When can we expect to have a final decision on what these poorest of poor countries would be able to bring in, what foodstuffs, commodities, raw materials, etc.? When will we be able to hear about that?

    Ms. Suzanne Vinet: My understanding is that we should be able to make a recommendation very shortly, and we're hoping to be able to make the decision known in time for the G-8 summit.

    Mr. Howard Hilstrom: Is that CWD business totally under control in Saskatchewan and Alberta now, chronic wasting disease in the elk herd and the deer?

    Dr. André Gravel: Certainly, the agency has invested a lot of time and energy in controlling chronic wasting disease. We've had an education program since 2000. So far the investigation has revealed that without exception, all animals that have chronic wasting disease have been in contact with animals that were originally imported from the United States, so clearly, the source of infection, as far as Canada is concerned, is the United States. We paid over $30 million in compensation to eradicate chronic wasting disease from the industry. We think we're reaching the tail end of the infection, and hopefully, trade can resume once Canada is free of disease. I know the U.S. has been a little bit behind us in acting on chronic wasting disease, and they're now paying the cost for it. It's spreading very rapidly in the States, and they're involved in eradication now too.

    The Chair: Does anyone have a lot of big questions left? We've been at this now for an hour and 45 minutes. Claude, you have some, Paul has some left, Mark has some. Looks like an all-night session, doesn't it? It's very important. I was down to a little place called Brantville on the Acadian peninsula, and I met the CFIA there looking at clams and oysters. We haven't talked about the fish at all yet. We stayed with beef and milk and everything else--and we even had chocolate too. This department is getting very diversified in its efforts and its demands.

    Claude.

[Translation]

    Mr. Claude Duplain: Paul spoke about research. Last week we were also talking about research and it was pointed out that Canada was not doing enough compared to the private sector. Are we doing now what we used to do before?

    Could we get a table showing what research the government does, what it used to do and what the trends are now, compared to what other countries are doing? This would give us an idea of our positioning in all of this.

[English]

    Dr. Gordon Dorrell: Could I seek clarification on that? Are you talking about specific types of research or general areas of research where we're either a leader or should become a leader?

[Translation]

    Mr. Claude Duplain: I would like to have information on general areas of research, but also on specific types of research if that is possible.

[English]

    Dr. Gordon Dorrell: I could certainly provide you with information as to what the department is doing and give you some indication of planning that has been going on in the last few months and will go on during the summer in respect of establishing, through consultation with our partners, a new strategic direction that should carry us forward in the next five to ten years with different types of research. As you would probably imagine, food safety, in cooperation with others, is critical. The value-added side is going to receive more attention. If that's the sort of thing you would like, I'd certainly be prepared to send it to you.

[Translation]

    Mr. Claude Duplain: Could you give me figures?

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[English]

    Dr. Gordon Dorrell: I could certainly give you, in general terms, where we are today and where we hope to go in the future.

    The Chair: Thank you, Claude.

    Mark, you have a short question.

    Mr. Mark Eyking: Yes, I have a question.

    We often blame the U.S. and the EU for depressing world commodity prices with their subsidies. I am also on the trade committee, and we were down in South America. We had quite the tour of Brazil, and the potential in that country for grain crops and livestock production is phenomenal. If these subsidies went away tomorrow, are we prepared in Canada to be competing with these areas? It's a general question, but we often blame the United States and Europe for all these problems out there. I'm not saying we would blame Brazil, but are we just as competitive as these other countries, and do we have the potential to compete with them in the future?

    Ms. Yaprak Baltacioglu: Thank you very much for the excellent question. I would turn to Michael Keenan, who is the director general of the research and analysis directorate. His people have been doing exactly that kind of research.

    Mr. Michael Keenan (Director General, Research and Analysis Directorate, Strategic Policy Branch, Department of Agriculture and Agri-Food): We have been finding very much the same result. If you look at any major crop area in particular, you can see that the international competition Canadian producers are facing is coming increasingly from what you could call the low-cost, low-subsidy producers, the Brazils, the Argentinas, the Australias. In some of those cases they have, in the future, increased capacity for production, and very much, I think, the competitive pressures Canadian producers will be facing will be coming from those areas. We just did a scan recently, for example, looking at the production trends of major commodities over the last five years. Even though in the last five years U.S. subsidies have increased dramatically and EU subsidies have been very high, in Australia and Argentina, for example, wheat production has increased by 20%. Wheat production in the U.S. has gone down by 5%. The trend is even more marked in soy beans. In the last five years Argentinian soy bean production is up 59%, Brazilian is up 35%.

    So looking at the competitive challenges and the pressures on profitability, the international competitive forces are very much coming from those areas. That is a key point that's recognized in developing a broad policy agenda to try to improve the profitability of Canadian producers.

    Mr. Mark Eyking: I'm glad you're doing that work. I think it is going to be very important to continue it, because we have to know where to position ourselves in the years to come, where we sit in the big picture.

    Thank you.

    The Chair: Paul, you had something brief too?

    Mr. Paul Harold Macklin: Yes, of course--everything we say is brief. The answers may be longer, but the questions are brief.

    What are we doing in supplying support to those who have to comply with environmental programs throughout this country? Whether it be provincially instituted or not is not the question, but are we providing any form of grant or loan support for farmers to engage in bringing their farms up to an environmental standard that is acceptable?

    Ms. Yaprak Baltacioglu: First, we do have programs in place, like the CARD program, where we do help the producers in environmental farm planning. We also do a lot of research on what works for environmentally sustainable production, and we share best practices and the information with the farmers. In addition to that, one of the priorities of the agricultural policy framework our minister has talked about many times and we have briefed you many times about is environmental sustainability. And part of the initiatives we are hoping to finalize with the provinces will be to provide incentives to farmers in order for them to identify the issues on their farms and to do something about them. Plans are plans, but if you don't implement them, they really don't give you anything. So this has been the agreement of the federal-provincial ministers of agriculture, and we're hoping, as our minister said, soon to be able to outline the details.

»  (1725)  

    Mr. Paul Harold Macklin: Do we have an estimated number for how much money would be allocated to that program?

    Ms. Yaprak Baltacioglu: I'm not at liberty to share numbers with you, sir.

    Mr. Paul Harold Macklin: Okay. Thank you.

    The Chair: Howard.

    Mr. Howard Hilstrom: Are our potato exports out of P.E.I. and the Maritimes to the States flowing with no problems now, after that potato wart issue that came up a year ago? Or are there still some issues there that are being worked on?

    Mr. Bob Carberry: I can't avoid these questions, no matter where I go.

    We're just entering the second year of a three-year program. What the U.S. agreed to is that we would look at all fields as they are harvested for any signs of potato warts. The island is on a three-year rotation, and we just went through the first year of that, so we have two more years to clean off the entire island. There's a small quarantine zone with the infected field, plus a buffer around it, where we're not shipping, but we're relatively unrestricted from the other areas.

    Mr. Howard Hilstrom: Yes, but the potatoes are moving fairly well across the border without much problem.

    Mr. Bob Carberry: Yes, they are.

    Mr. Howard Hilstrom: Okay.

    The last question I have is in regard to the tagging program for cattle and other livestock. That program was originally put in and finally accepted by producers as a trace-back system. Recently, there's been discussion about the fact that they'd like to now start to use it maybe for identifying stray animals that are wandering around. Has that come up? If so, I would just put a word of caution in that most ranchers aren't going to be too keen to have that program expanded to other uses. Is there any talk about that now?

    Dr. André Gravel: I'm not aware of any discussion, as far as the agency is concerned, on that subject. We still feel the cattle identification program is a good program. It serves the purpose of the industry, but it also serves our own purpose of doing disease trace-back, investigation related to residue violation, etc. I'm not aware of what you just mentioned.

    Mr. Howard Hilstrom: I happen to be a cattleman, that's why I brought it up. We're mostly in favour of this program, but we really want to be consulted big time before there's any expansion from its original stated mandate, mission, and purpose. As I say, it's been reported and considered, at some low level possibly, that it could be used for something like stray animals, so I just brought it up. You say there's no real discussion about it now, so that's fine. It's like everything else: consult before the decisions are made.

    The Chair: Thank you, Howard.

    There's one question no one asked. In the last five years, the last census period, we lost a tremendous number of farmers. We know there's as much land under cultivation, but has the department made any effort to analyse where all these people went?

    Mr. Tom Richardson: Mr. Chairman, I'm not sure we know exactly where they went. Some of them were retirements. I think everyone knows from the census that we're seeing an increase in the rate we saw in the early 1990s. Some people feel that we're still on about the 1% a year decline that we've had over the last 20 or 30 years. So some of these people may be pre-boomers who are retiring.

    It's quite a fascinating topic, though, and I want to put out one example just to stimulate a little thought. The biggest decline among commodity groups was in the dairy industry. There was about a 23% drop in the number of dairy farms. I think some people found that surprising, because they think of supply management as being more stable, and people thought perhaps the grain sector would see a greater decline than it did. If you try to think through supply management, the second greatest decline was hogs, about 11%. In the case of hogs it was mainly the smaller producers, and that was also the case in dairy. I think what you saw in dairy is probably in many cases a lifestyle thing. I know some of the people at Farm Credit Canada say the kids don't want to take over the 20-cow dairy herd from Dad, they don't want to work seven days a week. I know the minister has mentioned some examples from his riding of that same kind of thing. You're seeing a shift of some smaller farms, especially in the intensive livestock, like dairy and hogs, where it's a full time job. Those smaller farms are consolidating or moving on.

     Maybe they were simply part-time farmers already and they just decided to stop doing that; there's probably some of that. Some of them were retirements. We don't get the detailed information on the census to link it to--they call it the AgPop link. The agriculture data become linked with the population census. We don't get that data until later in the year. At that time we'll be able to do some work and see what's happening there. Trying to think about why they're happening is something we're quite interested in, because one of the planks in the APF--and the minister has spoken to it many times--is the whole question of how you renew the sector. We all know that just as in every other sector of the economy where the baby boomers are going to go, we will get that shift over the next five or ten years. It's happening everywhere. So trying to understand the last five years, what it means, and what it means for the next five years is a very important topic for us.

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    Ms. Yaprak Baltacioglu: As well, Mr. Chairman, we are looking at the challenges of beginning farmers and how they can be addressed under the risk management, as well as the renewal component. Also, we're looking at the retiring farmers to facilitate smooth intergenerational transfer. We're trying to use the facts to better design policies so that they will address the needs of the farmers.

    The Chair: I'd like to conclude our meeting and thank Mr. Deacon and everyone else for coming this afternoon. We sometimes endure these by the seat of our pants as much as by what our heads can absorb. We've been here a long time, so on behalf of all the committee, I'd like to thank you for coming. We know you are available and if members have a question, they can simply get on the phone or write a letter, and hopefully, you'll get an answer back to them.

    The meeting's adjourned.